NO CV IN THE FIFTH DISTRICT COURT OF APPEALS DALLAS, TEXAS EL TACASO, INC., Appellant JIREH STAR, INC. AND AARON KIM, Appellees

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1 NO CV IN THE FIFTH DISTRICT COURT OF APPEALS DALLAS, TEXAS Lisa Matz, Clerk 5th Court of Appeals FILED: 06/02/2011 EL TACASO, INC., Appellant v. JIREH STAR, INC. AND AARON KIM, Appellees On Accelerated Appeal from the rd 193 Judicial District Court, Dallas County, Texas Trial Court Cause No. DC The Honorable Carl Ginsberg presiding APPELLANT S FIRST AMENDED BRIEF LAW OFFICES OF TERRY JARVIS, P.C Gaston Avenue, Suite 700 Dallas, Texas Ph: (214) Fax: (214) jarvis1@sbcglobal.net By: Terry Jarvis State Bar No.: Attorney for Appellant ORAL ARGUMENT REQUESTED

2 IDENTITY OF PARTIES AND COUNSEL El Tacaso, Inc. Appellants and Plaintiffs Trial and Appellate Counsel Terry Jarvis Law Office of Terry Jarvis, P.C Gaston Ave., Suite 700 Dallas, Texas Jireh Star, Inc. and Aaron Kim Appellees and Defendants Trial Counsel Tailim Song Law Firm Tailim Song Farah Ahmed Coit Road, Suite 350 Dallas, Texas Appellate Counsel Chad M. Ruback State Bar No The Ruback Law Firm 8117 Preston Road, Suite 300 Dallas, Texas

3 REQUEST FOR ORAL ARGUMENT Pursuant to Rule 39 of the Texas Rules of Appellate Procedure, Appellant, El Tacaso, Inc. hereby requests the opportunity to present and provide argument to the Court, and submits that oral argument would significantly aid the Court in determining the legal and factual issues presented in this appeal. 3

4 TABLE OF CONTENTS Page IDENTITY OF PARTIES AND COUNSEL...2 REQUEST FOR ORAL ARGUMENT...3 INDEX OF AUTHORITIES...5 STATEMENT OF THE CASE...7 ISSUE PRESENTED...8 STATEMENT OF FACTS...8 SUMMARY OF THE ARGUMENT...11 ARGUMENT...12 Appellees Did Not Prove an Imminent Threat of Irreparable Injury The Temporary Injunction did not Restore the Status Quo of the Positions of the Parties...13 The Trial Court Exceeded its Jurisdiction in Granting the Temporary Injunction...14 The Temporary Injunction Order Fails to Comply with Tex. R. Civ. P. 683 and Is Void on its Face The Trial Court Abused its Discretion in Granting the Temporary Injunction which Prevents Appellant from Exercising its Legal Rights...17 CONCLUSION...18 PRAYER...18 CERTIFICATE OF SERVICE...19 APPELLANT S APPENDIX - LIST OF DOCUMENTS

5 INDEX OF AUTHORITIES Cases Page Amend v. Watson, 333 S.W.3d 625 (Tex.App. Dallas 2009, no pet.) Dallas Anesthesiology Assoc., P.A. v. Dallas Anesthesia Group, P.A., 190 S.W.3d 891(Tex.App. Dallas, 2006, no pet.) Benavides ISD v. Guerro, 681 S.W.2d 246 (Tex.App. San. Antonio, 1984, writ ref d n.r.e.) Breceda v. Whi, 224 S.W.3d 237 (Tex.App. El Paso 2005, no pet.) Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002)...12 Fairfield Estates L.P. v. Griffin, 986 S.W.2d 719 (Tex.App. Eastland 1999, no pet.) Harbor Perfusion, Inc. v. Floyd, 45 S.W.3d 713 (Tex.App. Corpus Christi 2001, no pet.) , 17 Independent Capital Management, L.L.C. v. Collins, 261 S.W.3d 792 (Tex.App. Dallas 2008, no pet.) Rice v. Pinney, 51 S.W.3d 705 (Tex.App. Dallas 2001, no pet.) Slay v. W.R. Fugitt, 302 S.W.2d 698 (Tex.Civ.App. Dallas 1957, writ ref d.) Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993)

6 Statutes and Rules Tex. Civ. Prac. & Rem. Code (a)(4) Tex. R. Civ. P , 16, 18 6

7 STATEMENT OF THE CASE Appellant, El Tacaso, Inc., filed suit against Appellee, Jireh Star, Inc., alleging: (i) Collection of Debt; (ii) Breach of Contract; (iii) Quantum Meruit; (iv) Personal Property Liens; (v) Request for Declaratory Relief; and (vi) Eviction and Restitution of Property. CR On April 24, 2008, Appellee, Jireh Star, Inc., executed a Promissory Note that contained a cross default provision where the uncured failure to make timely any payment due under the Promissory Note created a breach of the lease on a commercial property located at Harry Hines Blvd., Dallas, Texas (hereinafter Lease ). CR Appellee, Jireh Star, Inc., failed to make the payments on the Promissory Note for the months of July, August, September and October 2010 thereby breaching the Lease. RR, V3, P55, L24 - P56, L4. After the Appellant gave all notices required under the Promissory Note and Lease, Appellant utilized eviction procedures authorized by the Lease. CR , CR Appellees then filed an application for a Temporary Injunction and asserted claims for i) Fraud, ii) Alter Ego; iii) Violations of the Texas Deceptive Trade Practices Act; iv) Negligent Misrepresentation; v) Breach of Contract; vi) Breach of Quite Enjoyment; vii) Intentional Tortuous Interference with Current and Prospective Business Relations; and viii) False rd Imprisonment. CR The 193 Judicial District Court granted the Temporary Injunction. Tab 1, 1-4, CR Neither party requested, nor did the trial court prepare any findings of fact and conclusions of law. Appellant brings this accelerated appeal under Tex. Civ. Prac. & Rem. Code (a)(4). 7

8 ISSUE PRESENTED Issue 1: Whether the trial court abused its discretion in granting a temporary injunction because: 1) Appellees did not prove an imminent threat of irreparable harm; 2) the trial court altered the status quo of the parties; 3) the trial court exceeded its jurisdiction; 4) the temporary injunction order fails to comply with Tex. R. Civ. P. 683 and is void on its face; and 5) the temporary injunction is vague and overly broad. STATEMENT OF FACTS Appellant owns the property located at Harry Hines Blvd., Dallas, Texas. RR V3, P71, L On April 24, 2007, Appellant and Appellee, Jireh Star, Inc., entered into a Lease Agreement, including a personal guarantee by Appellee, Aaron Kim. CR Additionally, on that same day Appellant and Appellee, Jireh Star, Inc., entered into a License Agreement to formalize the relationship of the parties related to the use and control of Harry Hines Blvd., Dallas, Texas. CR In addition to other terms in the License Agreement, it stated that if Appellee, Jireh Star, Inc., wanted to extend the License Agreement after the expiration of the initial twelve months, Appellee, Jireh Star, Inc., would be required to pay Appellant, as Licensor, a one time fee of $158, CR On March 23, 2008, Appellee, Jireh Star, Inc., expressed its desire to renew the License Agreement. RR, V4, P37. Then on April 24, 2008, to satisfy the payment due by the Maker [Appellee, Jireh Star, Inc.] under Section 3.2 of the License Agreement entered into by the Holder [Appellant] and Maker" Appellee, Jireh Star, Inc. 8

9 executed a Promissory Note in favor of the Appellant in the amount of $158, CR The Promissory Note required monthly payments of $3, over a four year period beginning in April, 2008 and ending May, CR The Promissory Note also contained cross default language stating that a default with regard to this Promissory Note shall be a (sic) considered a default or act of non-performance under the License Agreement and Lease Agreement entered into by these parties on April 24, 2007." CR Appellee, Jireh Star, Inc., testified that it made all of the payments due on the Promissory Note from April, 2008 until June, RR, V3, P55, L Appellee, Jireh Star, Inc., further admits that it failed to make the payments due under the Promissory Note for the months of July, August, September and October of RR, V3, P55, L24 - P56, L4. On September 15, 2010, Appellant sent Appellee, Jireh Star, Inc. a letter notifying it of its failure to make the required payments due on July 24, 2010 and August 24, CR This letter also put Appellee, Jireh Star, Inc. on notice that unless it made the required payments past due under the Promissory Note, Appellants intended to exercise its cross default rights under the Promissory Note with respect to the Lease. CR On September 29, 2010, Appellant sent Appellee, Jireh Star, Inc., a letter notifying it that Appellees have failed to cure the default on the Promissory Note within ten (10) days as required in the note. CR The letter further put Appellee, Jireh Star, Inc. on notice that under the Cross Default terms of the Promissory Note you are now in default of the Lease Agreement executed by you on April 24, 2007 with respect to Harry Hines, Dallas, Texas. CR Appellee, Jireh Star, Inc., admits that it did not make any payments due under the Promissory 9

10 Note after receiving the September 29, 2010 letter. RR, V3, P63, L15 - P64, L12. On November 4, 2010, Appellee, Jireh Star, Inc., was given a Notice to Vacate Harry Hines Blvd., Dallas, Texas. CR The Lease provided that, in the event of a default on the Lease, the remedies under Section 19.b and 19.c. of the Lease permitted the Landlord [Appellant] to [e]nter upon and take possession of the Demised Premises, by force if necessary. CR On February 15, 2011, Appellants evicted Appellees from Harry Hines, Blvd., Dallas, Texas. CR On February 17, 2011, Appellees filed Counter-Plaintiff Jireh Star, Inc s First Amended Counterclaim, and Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction. CR At the close of the temporary injunction hearing on March 11, 2011, the trial court stated that it was going to grant the temporary injunction and enjoin the plaintiff [Appellant] from interfering with the quiet use and enjoyment of the leasehold. RR V3, P80, L Appellees then filed a proposed Temporary Injunction. CR On March 22, 2011, Appellant filed objections to the proposed Temporary Injunction. CR On March 23, 2011, Appellant filed a letter brief detailing its opposition to the form and content of the proposed temporary injunction order. CR On April 1, 2011, the trial court signed the temporary injunction order proposed by Appellees with two hand-written modifications. Tab 1, 1-4, CR

11 SUMMARY OF THE ARGUMENT This accelerated appeal arises from the trial court s abuse of discretion in granting the Appellees temporary injunction. Although the evidence was uncontroverted, the trial court failed to recognize that Appellees unjustifiably and unilaterally breached the Promissory Note. The Promissory Note included cross default provisions that made a breach of the Promissory Note a default in the Lease. Appellant, after proper notice, exercised its rights under the Lease and evicted Appellees. There is no irreparable harm as a money judgment could fully and adequately compensate Appellees for any alleged damages. Additionally, the Temporary Injunction did not restore the status quo by placing the parties in their last peaceable positions. Instead, it unlawfully locked the parties in their positions after Appellee, Jireh Star, Inc., unlawfully failed to make the payments due under the Promissory Note. Further, the trial court abused its discretion by limiting Appellant s lawful rights to pursue collection of a debt. The temporary injunction entered by the trial court is an abuse of discretion as it fails to comply with Texas law in that the language finding irreparable harm lacks the required specificity and is therefore conclusory. Lastly, the trial court abused its discretion by entering an overly broad temporary injunction by granting relief in excess of the relief requested in Appellees application for extraordinary relief. Appellant asks this Court to dissolve the temporary injunction on the grounds that the trial court abused its discretion in finding irreparable harm and exercising jurisdiction it did not have and because the temporary injunction order entered is overly broad and conclusory. 11

12 ARGUMENT A temporary injunction s purpose is to preserve the status quo of the litigation s subject matter pending a trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (citing Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). A temporary injunction is an extraordinary remedy and does not issue as a matter of right. Id. To be entitled to a temporary injunction, the applicant must plead a cause of action and further show both a probable right to recover on that cause of action and a probable, imminent, and irreparable injury in the interim. Butnaru, 84 S.W.3d at 204. The decision to grant or deny a temporary injunction is within the trial court s sound discretion and is reversed on appeal upon a finding of abuse of discretion. Amend v. Watson, 333 S.W.3d 625, 627 (Tex.App. Dallas 2009, no pet.). A probable right of recovery is shown by alleging a cause of action and presenting evidence tending to sustain it. Dallas Anesthesiology Assoc., P.A. v. Dallas Anesthesia Group, P.A., 190 S.W.3d 891, (Tex.App. Dallas, 2006, no pet.). An injury is irreparable if damages would not adequately compensate the injured party or if they cannot be measured by any certain pecuniary standard. Butnaru, 84 S.W.3d at 204. Appellees Did Not Prove an Imminent Threat of Irreparable Injury A party proves irreparable injury for injunction purposes by proving that damages would not adequately compensate the party or cannot be measured by any certain pecuniary standard. Butnaru, 84 S.W.3d at 204. Regarding the damages related to an eviction, Appellee, Aaron Kim, was asked at the temporary injunction hearing by his attorney [i]s it hard to for you to calculate your damage from that night? RR, V3, P42, L6-7. Aaron Kim responded that 12

13 [y]ou know, not having not knowing what could have happened, it s difficult, but I can estimate based on prior data. RR, V3, P42, L8-10. The Appellees admit that they can calculate any alleged damages from the eviction should they prevail. Therefore, Appellees have an adequate remedy at law, no irreparable harm and the trial court abused its discretion by entering the temporary injunction. An injury is also irreparable if the plaintiff does not have an adequate remedy at law, and a plaintiff does not have an adequate remedy at law if the defendant is insolvent. There is no evidence that Plaintiff is insolvent and in fact the evidence is to the contrary. Appellee, Aaron Kim testified that he knew Appellant owned the building Appellee, Jireh Star, Inc., was leasing and the Lease also identifies Appellant as the landlord. RR, V3, P71, L14-16; CR The record establishes that Appellees would not suffer irreparable injury nor does the trial court s temporary injunction identify any irreparable injury with any specificity. Thus, the trial court abused its discretion and the temporary injunction should be dissolved. The Temporary Injunction did not Restore the Status Quo of the Positions of the Parties The purpose of a temporary injunction is to restore the last peaceable status quo pending trial. If an act of one party alters the relationship between that party and another, and latter contests the action, the status quo cannot be the relationship as it exists after the action. Benavides ISD v. Guerro, 681 S.W.2d 246, 249 (Tex.App. San. Antonio, 1984, writ ref d n.r.e.). In this case, Appellee, Jireh Star, Inc. admits that they made payments on the Promissory Note from April, 2008 until June, RR, V3, P55, L Appellee, Jireh Star, Inc. 13

14 further admits that it did not make any payments due under the Promissory Note for the months of July, August, September, and October, RR, V3, P55, L24 - P56, L4. Appellant contested the non-payment of the amounts due under the Promissory Note with notice letters dated September 15, 2010, September 29, 2010 and a notice to vacate dated on November 4, CR The temporary injunction permits Appellee, Jireh Star, Inc. to remain on the premises without making the payments due under the Promissory Note. CR The temporary injunction did not restore last peaceable status quo. The actions solely of Appellees altered the status quo of the parties because Appellees remain on the property without paying its obligations under the Promissory Note. Appellant contested those actions. The temporary injunction did not restore the status quo and therefore the trial court abused its discretion by entering the temporary injunction. The Trial Court Exceeded its Jurisdiction in Granting the Temporary Injunction Where the injunctive relief granted exceeds the relief requested by the applicant in its petition, the trial court exceeds its jurisdiction. Harbor Perfusion, Inc. v. Floyd, 45 S.W.3d 713, 718 (Tex.App. Corpus Christi 2001, no pet.). In this case, Appellees requested the trial court enjoin Appellant from interfering with Counter-Plaintiff s business by directly or indirectly wrongfully locking out Counter-Plaintiff; blocking the parking lot; blocking the drive thru; blocking the egress or ingress of employees and customers; falsely imprisoning Gorditas employees; and other act (sic) that wrongfully prevents access to Counter-Plaintiff s customers, officers, vendors, providers, agents, contractors, and employees at Harry Hines, Dallas, TX CR

15 Despite the narrow request for injunctive relief in its petition, Appellees provided the trial court a broad form temporary injunction Order which the trial court entered. CR The temporary injunction orders:...that Plaintiff El Tacaso, (sic) including its agents, officers, principals, or representatives, is temporarily restrained from interfering with Defendant s quiet enjoyment of the leasehold, including but not limited to interfering with Defendant s business by directly or indirectly wrongfully evicting/locking-out or locking-in Defendant, itself, and its officers, vendors, providers, agents, contractors, and employees, including act of changing the locks of the leasehold; and from interfering with Defendant s customers by directly or indirectly wrongfully preventing access to Defendant s restaurant itself, its doors, its parking lot, or its drivethru....that Plaintiff El Tacaso, Inc., including its agents, officers, principals, or representative, is temporarily restrained from from (sic) taking direct or indirect actions to promote its desire, intention, and purpose to ruin Defendant s business in order to regain the leasehold and Defendant s restaurant, including but no limited to demanding payment, taking actions to collect, or exercising any default rights in relations to the subject-promissory Note and subject-license Agreement. CR In addition to the relief sought by Appellees, the temporary injunction restricts Appellant from: 1) interfering with quiet enjoyment of the leasehold; 2) evicting the Appellees; 3) changing the locks on the leasehold; 4) taking acts to regain the leasehold; 5) demanding payment; 6) taking collection actions; and 7) enforcing default rights. The relief granted by the trial court exceed the relief sought by Appellees and exceeds the trial court s jurisdiction and as such is an abuse of discretion. Therefore, the temporary injunction should be dissolved. 15

16 The Temporary Injunction Order Fails to Comply with Tex. R. Civ. P. 683 and Is Void on its Face Tex. R. Civ. P. 683 requires the trial court to set out specifically the reasons it believes the applicant will suffer injury if it does not grant the injunction. Independent Capital Management, L.L.C. v. Collins, 261 S.W.3d 792 (Tex.App. Dallas 2008, no pet.). The reasons must be specific and legally sufficient, and not mere conclusory statements. Id. at 795. Failure to comply with the requirements of Rule 683 is an abuse of discretion. Id. The temporary injunction at issue in this accelerated appeal is conclusory. Specifically, the order states: (7) Defendant has sufficiently shown a probable right to relief of its claims for Fraud, Breach of Contract, Breach of Quiet Enjoyment, violation of Deceptive Trade Practices Act, and Tortious Interference with Business Relations and other claims sought in its First Amended Counter-Petition and Application for Temporary Restraining Order, Temporary Injunction, and Permanent Injunction; and (8) Defendant has sufficiently shown that it will suffer a probable injury, the harm is imminent, the injury would be irreparable, and that Defendant has not other adequate legal remedy. CR The trial court did not specify legally sufficient reasons the applicant would suffer irreparable injury if the temporary injunction were not granted. Thus, these conclusory findings are not sufficient and do not comply with Rule 683, and therefore, this temporary injunction should be declared void on its face. 16

17 The Trial Court Abused its Discretion in Granting the Temporary Injunction which Prevents Appellant from Exercising its Legal Rights [A] trial court abuses its discretion by entering an overly-broad injunction which grants more relief than a plaintiff is entitled to by enjoining a defendant from conducting lawful activities or from exercising legal rights. Harbor Perfusion, 45 S.W.3d at 718 citing Fairfield Estates L.P. v. Griffin, 986 S.W.2d 719, 723 (Tex.App. Eastland 1999, no pet.). This injunction effectively prevents Appellant from pursuing its legal right of eviction through a forcible detainer action which is contrary to Texas law. [A] forcible detainer action is not exclusive, but cumulative of any other remedy that a party may have in the courts of this state, forcible detainer actions in justice court may be brought and prosecuted concurrently with any other possessory action, such as an action of trespass to try title, in the district court. Breceda v. Whi, 224 S.W.3d 237, 240 (Tex.App. El Paso 2005, no pet.) citing Rice v. Pinney, 51 S.W.3d 705, 709 (Tex.App. Dallas 2001, no pet.). When both title and possession are involved, a District Court suit in trespass to try title takes precedence and may be maintained concurrently with a Justice Court action in forcible entry and detainer, even to restraint of proceedings in the latter court. But when the sole matter involved is one of possession, the District Court has no authority to restrain by injunction a trial of the same issue in Justice Court. Slay v. W.R. Fugitt, 302 S.W.2d 698, 701 (Tex.Civ.App. Dallas 1957, writ ref d.) Additionally, the temporary injunction prevents Appellant from exercising any of its rights under the contracts entered into between the parties. RR, V3, P 54, L12 - P55, L18. Specifically, these rights include but are not limited to reporting these defaults to credit reporting agencies and business ratings agencies, and taking other lawful actions to collect 17

18 money lawfully owed to Appellant by Appellee, Jireh Star, Inc. Thus, the trial court abused its discretion in granting the temporary injunction. CONCLUSION This trial court abused its discretion in granting a temporary injunction because: 1) Appellees did not prove an imminent threat of irreparable harm and have an adequate remedy at law; 2) the temporary injunction did not restore status quo and place the parties back in their last peaceable positions; 3) the trial court exceeded its jurisdiction by granting relief in excess of that requested in the Appellees petition and application.; 4) the temporary injunction order fails to comply with Tex. R. Civ. P. 683 and is void on its face; 5) the temporary judgment bars Appellant from exercising its legal rights.. PRAYER WHEREFORE, PREMISES CONSIDERED, Appellant prays the court for the reasons stated above, reverse the trial court s judgment, declare the temporary injunction void and for such other relief, including general relief, to which it shows itself to be entitled. Respectfully submitted, /s/ Terry Jarvis LAW OFFICES OF TERRY JARVIS, P.C Gaston Avenue, Suite 700 Dallas, Texas Ph: (214) Fax: (214) Terry Jarvis State Bar No ATTORNEY FOR APPELLANT 18

19 CERTIFICATE OF SERVICE I certify that I mailed a copy of Appellant s First Amended Brief by U.S. Mail to Chad M. Ruback whose address is The Ruback Law Firm, 8117 Preston Road, Suite 300, Dallas, Texas on June 2, /s/ Terry Jarvis TERRY JARVIS 19

20 NO CV EL TACASO, INC., Appellant v. JIREH STAR, INC. AND AARON KIM, Appellees APPELLANT S APPENDIX LIST OF DOCUMENTS Trial Court s Temporary Injunction... Tab 1 Tex. Civ. Prac.& Rem. Code (a)(4) Tab 2 Tex. R. Civ. P Tab 3 20

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